{"version":1,"type":"rich","provider_name":"Libsyn","provider_url":"https:\/\/www.libsyn.com","height":90,"width":600,"title":"90 - What is Intrinsic Value?","description":"Mental Models discussed in this podcast:  Intrinsic Value Extrinsic Value Define your terms  Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.&amp;nbsp; Follow me on Twitter and YouTube Twitter Handle:&amp;nbsp;@TreyHenninger YouTube Channel:&amp;nbsp;DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you\u2019d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at&amp;nbsp;DIYInvesting.org\/Patron. You can find out more information by listening to&amp;nbsp;episode 11&amp;nbsp;of this podcast. Show Outline The full show notes for this episode are available at&amp;nbsp;https:\/\/www.diyinvesting.org\/Episode90 Extrinsic Value vs Intrinsic Value Definition  Tweet:  \u201cBe very careful when describing an asset\u2019s \u201cvalue.\u201d Define your terms. They matter. Intrinsic value is the NPV of all future distributions of cash. (Not the NPV of FCF) Extrinsic value is the market value as determined by others for any reason at all.   Responses:  This is an extreme view What about Berkshire? What is their cash worth?   My thoughts:  \u201cThere is no fundamental difference between equity that doesn\u2019t distribute cash *ever* and a bond with a 0% interest rate that not only doesn\u2019t make interest payments but also defaults prior to returning your principal. How much would you pay to own that bond? \u201cIf I knew *with certainty* that a business would never distribute cash. (Dividends, buybacks, or liquidation) Then the company is fundamentally worthless to shareholders. It means all of its growth is for nothing because it will reach bankruptcy before giving cash.    Summary: Be very careful when describing an asset's &quot;value.&quot; You need to define your terms because they matter. Intrinsic value is the Net Present Value of all future distributions of cash. (Not the NPV of Free Cash Flow) Extrinsic value is the market value as defined by others.&amp;nbsp; By focusing on intrinsic value investors can alleviate the need to predict price action in order to turn a profit. Investors, as opposed to speculators, earn their return from business performance. Therefore, it is critical to focus your time and effort on studying business performance.&amp;nbsp; ","author_name":"The DIY Investing Podcast","author_url":"https:\/\/www.diyinvesting.org","html":"<iframe title=\"Libsyn Player\" style=\"border: none\" src=\"\/\/html5-player.libsyn.com\/embed\/episode\/id\/15714767\/height\/90\/theme\/custom\/thumbnail\/yes\/direction\/forward\/render-playlist\/no\/custom-color\/1b07f0\/\" height=\"90\" width=\"600\" scrolling=\"no\"  allowfullscreen webkitallowfullscreen mozallowfullscreen oallowfullscreen msallowfullscreen><\/iframe>","thumbnail_url":"https:\/\/assets.libsyn.com\/secure\/content\/81650678"}